EV Battery-Maker Dow Kokam Caught by Inflated Growth Projections

Dow Kokam supplies lithium-ion battery systems for the ZeroTruck, all-electric medium-dutry truck design based on the Isuzu N series chassis.

When Dow Kokam broke ground on its Midland, Mich. lithium battery plant in June 2010, the company said it would bring 320 jobs to the state. At the opening ceremony—attended by Vice President Joe Biden and then Michigan Governor Jennifer Granholm—the company’s chief executive Ravi Shanker said the $161 million DOE grant received by Dow Kokam, owned in part by Dow Chemical, would produce enough batteries to power 60,000 fully electric or hybrid vehicles annually. Nearly three years later, Dow Kokam now admits that demand for its batteries have not met expectations.

Four months before the groundbreaking, analysts were already predicting that domestic lithium battery production would exceed demand, and that a glut was in the making.

In February 2010, John Gartner, an analyst at Pike Research (and a contributor to PluginCars.com) wrote that about $2 billion in federal stimulus funding has spurred the building of battery facilities in Michigan and Indiana. “The market appeal of EVs will have to be broadened beginning in 2012-13 to attract a more cost-conscious consumer, and that adjustment period could impact battery manufacturers who are likely to then be in full production,” he wrote. “The EV audience is unlikely to take off as quickly as the auto industry hopes.”

Vice President Joe Biden at a groundbreaking ceremony for a new Dow Kokam advanced battery plant in Midland, Mich., June 21, 2010. (Official White House Photo)

In the same month, Jacob Grose, an analyst for Lux Research, expressed the same concerns. "When the U.S. government and other governments offer billions of dollars in subsidies to lithium-ion battery manufacturers to build new plants, they're going to build new plants," he said. "Unlike the market, which is pretty good at matching supply and demand, governments aren't considering demand, and they're creating conditions that are just right for a glut."

The Detroit News reported last week that Dow Kokam requested a time extension on requirements to meet State of Michigan tax incentives worth up to $140 million. The Michigan Strategic Fund board, which manages the incentives, said hiring at Dow Kokam has been more gradual than expected, falling short on its requirements for funding. Dow Kokam is one of about a half-dozen companies to receive battery manufacturing tax incentives from the state.

The state had required Dow Kokam to create at least 300 jobs by the end of 2015, but by the end of 2012, the battery maker had only created 109 jobs. Dow Kokam says it has invested $340 million into its 400,000 square-foot facility in Midland, Mich. Dow Kokam will now have until the end of 2018 to meet its promised level of job creation.

Dow Kokam manufactures lithium-ion cells and packs for the automotive, defense, industrial and medical industries. Dow Kokam does not produce lithium ion batteries for electric vehicles that you are likely to know—but instead provides to niche and industrial vehicles such as the French ultra-compact Neoma EV, converted F-150 plug-in hybrids for pilot programs, medium-duty EVs used for fleets, such as refuse trucks.

Though this extension request at this stage only applies to Dow Kokam, it is part of larger trend in the EV industry, in which production and sales targets are being recalibrated to reflect more realistic expectations of slow and steady growth in the industry.